<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended July 27, 1997
(First Quarter)
Commission File Number 0-22252
CATTLEMAN's, INC.
(Exact name of registrant as specified in its charter)
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Delaware 38-3012740
(State or other jurisdiction (IRS. Employer
of incorporation or organization) Identification Number)
1825 Scott Street
Detroit, Michigan 48207
(Address of executive offices) (Zip Code)
Company's telephone number, including area code: (313) 833 - 2700
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve months (or for such shorter
period that the Registrant was required to file such reports), and (2)
has been subject to such requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding at July 25, 1997
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Common stock, $.001 per share 3,246,983
<PAGE> 2
Part 1: Financial Information
Cattleman's, Inc.
Item 1 Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
($ in Thousands)
<TABLE>
<CAPTION>
JULY 27, 1997 APRIL 27, 1997
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<S> <C> <C>
ASSETS
Current Assets
Cash $ 699 $ 919
Accounts Receivable 4,948 4,530
Inventory - Finished Goods 3,185 3,784
Inventory - Supplies 208 287
Prepaid Expenses 343 491
Refundable Income Taxes 298 121
Deferred Income Taxes 64 64
------------- --------------
Current Assets 9,745 10,196
Property, Plant & Equipment 11,879 11,629
Accumulated Depreciation (6,363) (6,084)
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Net 5,516 5,545
Other Assets
Goodwill 299 306
Loans receivable, officers 300 300
Sundry 287 287
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Other Assets 886 893
$ 16,147 $ 16,634
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LIABILITIES
Current Portion, long-term debt $ 3,877 $ 4,384
Accounts Payable 4,018 3,488
Accrued Expenses and Other
Current Liabilities 1,116 1,231
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Current Liabilities 9,011 9,103
Long-term Debt 2,291 2,447
Deferred Income Taxes 101 101
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2,392 2,548
Total Liabilities 11,403 11,651
EQUITY
Capital 707 716
Retained Earnings 4,037 4,267
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4,744 4,983
$ 16,147 $ 16,634
============= ==============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
<PAGE> 3
Cattleman's, Inc.
Item 1 Financial Statements
Condensed Consolidated Statements of Operations
(unaudited)
($ in thousands except per share data)
Thirteen Weeks Ended
<TABLE>
<CAPTION>
JULY 27, 1997 JULY 28, 1996
------------------ --------------------
<S> <C> <C>
Sales $ 32,332 100.0% $ 32,473 100.0%
Cost of Goods Sold 31,428 97.2% 31,010 95.5%
Selling, General & Admin. 1,100 3.4% 1,140 3.5%
------------------ --------------------
Earnings (Loss) From
Operations (196) -0.6% 323 1.0%
Interest, Net 164 0.5% 175 0.5%
------------------ --------------------
Earnings (Loss) Before
Income Tax (360) -1.1% 148 0.5%
Income Tax (Benefit) (130) -0.4% 53 0.2%
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Net Earnings (Loss) $ (230) -0.7% $ 95 0.3%
================== ====================
Earnings (Loss) Per Share ($0.07) $0.03
========= =========
Average Shares Outstanding 3,239,725 3,291,583
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
<PAGE> 4
Cattleman's, Inc.
Item 1 Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
($ in Thousands) Thirteen Weeks Ended
JULY 27, 1997 JULY 28, 1996
-------------- -------------
<S> <C> <C>
CASH FLOW PROVIDED BY OPERATING ACTIVITIES $ 702 $ 1,228
INVESTING ACTIVITIES
Capital Expenditures & Other (250) (402)
FINANCING ACTIVITIES
Net Repayments on Debt (663) (1,434)
Repurchase of Common Stock (9) 0
Change in Cash (220) (608)
Beginning Cash 919 738
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Ending Cash $ 699 $ 130
============ ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 173 $ 182
============ ===========
Income Taxes $ 55 $ 0
============ ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
<PAGE> 5
CATTLEMAN's, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements of
Cattleman's, Inc. ("Cattleman's") have been prepared in accordance with the
instructions for Form 10-Q and are unaudited. The statements include all
adjustments (consisting of normal recurring accruals) which Cattleman's
considers necessary for a fair presentation of the interim periods. The
accounting policies followed by Cattleman's and additional footnotes, are
included in the Cattleman's fiscal year 1997 annual report on Form 10-K.
This 10-Q is written with the presumption that the users of the interim
financial statements have read or have access to Cattleman's Form 10-K, which
contains the latest audited financial statements and notes thereto, together
with Management's Discussion and Analysis of Financial Condition and Results
of Operations as of April 27, 1997 and for the year then ended. Only material
changes in financial condition and results of operations are discussed in the
remainder of Part I.
Cattleman's interim operating results may be subject to substantial
fluctuations which do not necessarily occur or recur on a seasonal basis.
Such fluctuations are normally caused by competitive and other conditions in
the cattle and boxed beef markets over which Cattleman's has little or no
control. Therefore, the results of operations for the interim periods
presented are not necessarily indicative of the results to be attained for the
full fiscal year.
2. COMMITMENTS AND CONTINGENCIES
In late September, early October, 1996, there was an apparent outbreak
of Legionnaires' Disease in the Farmington/Farmington Hills area. In a press
statement issued by the Oakland County Health Department on November 8, 1996,
Oakland County indicated that they found Legionella bacteria in the water
cooling condenser located on top of Cattleman's retail facility located in
Farmington, Michigan. There were thirty reported cases and four reported
fatalities. The effect on sales is unknown. See "Part II Item 1. Legal
Proceedings."
<PAGE> 6
CATTLEMAN's, INC.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - FIRST QUARTER - FISCAL 1998
Comparison of thirteen weeks ended July 27, 1997 to thirteen weeks ended
July 28,1996
RESULTS OF OPERATIONS
Sales for the thirteen weeks ended July 27, 1997 and July 28, 1996 were
$32,332,000 and $32,473,000 respectively. Sales dollars dropped .4% due to a
decrease in gross tonnage sold offset by an increase in the sales price per
pound. Retail sales, as a percent of total sales, decreased approximately 2%
over the prior period.
Cost of Goods Sold for the thirteen weeks ended July 27, 1997 and July
28, 1996 were $31,428,000 and $31,010,000 respectively, an increase of
$418,000. This represents 97.2% and 95.5% of sales for the respective
periods. This increase of 1.7% resulted primarily from higher prices for beef
carcasses during the quarter ended July 27, 1997.
Selling, General and Administrative Expenses for the thirteen weeks
ended July 27, 1997 and July 28, 1996 were $1,100,000 and $1,140,000,
respectively. These costs remained relatively stable.
Interest, net totaled $164,000 for the thirteen weeks ended July 27,
1997, down from $175,000 for the thirteen weeks ended July 28, 1996. The
decrease resulted primarily from a lower use of the revolving line of credit
throughout the period for slightly higher average accounts receivable levels.
Net Loss for the thirteen weeks ended July 27, 1997 totaled ($230,000)
compared with net earnings of $95,000 for the thirteen weeks ended July 28,
1996. The $325,000 decrease resulted primarily from lower margins in both
the processing and retail operations.
FINANCIAL CONDITION
Cash Provided By Operations for the thirteen weeks ended July 27,
1997, totaled $702,000. These monies were generated mainly from decreases in
inventory of $678,000, decreases in prepaid expenses of $148,000 and an
increase in accounts payable of $530,000 offset by increases in accounts
receivable of $418,000, decreases in net income of $230,000. Cash provided by
operations in the thirteen weeks ended July 28, 1996 totaled $ 1,228,000 that
was used, primarily, to reduce the long-term debt.
Investing Activity for the thirteen weeks ending July 27, 1997 and July
28, 1996 was $250,000 and $402,000 respectively. Funds were used primarily for
improvements to and equipment in the processing plant.
Financing Activity for the thirteen weeks ended July 27, 1997 represented
repayments of $663,000 of debt, net of borrowings.
<PAGE> 7
PART II. OTHER INFORMATION
CATTLEMAN'S, INC.
ITEM 1. LEGAL PROCEEDINGS
Cattleman's is, from time to time, a party to legal proceedings
arising in the normal course of its business. Management believes
that none of the legal proceedings currently outstanding will have
a material adverse effect on Cattleman's business, financial
condition or results of operations. Since March, 1997,
Cattleman's has been named as a co-defendant in ten (10) lawsuits
(one of them a purported class action lawsuit on behalf of 17
individuals) filed in the Circuit Court for the County of
Oakland. The complaints generally allege that Cattleman's was
negligent with respect to its water cooling condenser located on
top of its retail facility located in Farmington, Michigan which
condenser allegedly was the source of Legionella bacteria which
allegedly caused injury or death to the respective plaintiffs named
therein. The manufacturer of the water cooling condenser and the
company responsible for its maintenance are also named as
co-defendants. The plaintiffs generally seek compensatory damages.
Although there can be no assurance as to the outcome of the
lawsuits, Cattleman's believes that it has meritorious defenses to
the allegations made in the complaints and is adequately insured
and is defending itself vigorously.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 - K
None
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Quarterly Report on Form 10 - Q for the
thirteen weeks ended July 27, 1997 to be signed on its behalf by the
undersigned thereunto duly authorized.
Cattleman's, INC.
DATE: September 10, 1997
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Markus Rohtbart
------------------------------------
Markus Rohtbart
Chairman of the Board & Treasurer
David D. Rohtbart
------------------------------------
David Rohtbart
President & Chief Executive Officer
<PAGE> 9
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
EX-27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-26-1998
<PERIOD-START> APR-28-1997
<PERIOD-END> JUL-27-1997
<CASH> 699
<SECURITIES> 0
<RECEIVABLES> 4,948
<ALLOWANCES> 117
<INVENTORY> 3,393
<CURRENT-ASSETS> 9,745
<PP&E> 11,879
<DEPRECIATION> 6,363
<TOTAL-ASSETS> 16,147
<CURRENT-LIABILITIES> 9,011
<BONDS> 2,291
0
0
<COMMON> 3
<OTHER-SE> 704
<TOTAL-LIABILITY-AND-EQUITY> 16,147
<SALES> 32,332
<TOTAL-REVENUES> 32,332
<CGS> 31,428
<TOTAL-COSTS> 31,428
<OTHER-EXPENSES> 1,100
<LOSS-PROVISION> 17
<INTEREST-EXPENSE> 164
<INCOME-PRETAX> (360)
<INCOME-TAX> (130)
<INCOME-CONTINUING> (230)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (230)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
